The actual amount of equipment that you need to trade forex is quite small. All that’s really required is a computer tied up to the internet or a smartphone with a stable internet signal. Then, it’s just a matter of scrapping up some spare change that you really don’t need and opening up a mini or regular account. After that, however, the going gets tougher. In order to do it right, you’re going to have to spend a lot of time researching the entire forex world, particularly how to spot a profitable trading opportunity and the mechanics of placing a trade order. Then, you need to put together a trade plan.
There are a multitude of risks involved in trading forex. The biggest danger is trading with a leverage ratio that is bigger than your shoe size and not using appropriate stop losses. Deciding to trade an event, instead of a trend or pattern, can also wreck an otherwise budding forex career. Lastly, do not listen to your ego.
What You Need To Start Trade Forex
If you want to trade forex, all you really need is access to some kind of computer that is tied into a stable internet connection. The reason is that your bank or broker will deliver the trading platform that you will be using to trade forex (either as a download or in cloud form) and, after that, all your actions will be inside your account, based on that platform. If you own a smartphone, the smartphone can act as the computer and you can access your account directly from your smartphone. Beyond this, you just need some trading capital. If you want to start out small, open what is known as a “mini account”; if not, just open a regular account.
Trade Forex When You’re Ready
Trade forex after you have finished your research and have developed a detailed trading plan. Your chances of success will be higher. While you researching, making sure to go over all of the following topics: the risk of using high leverage ratios; the dangers of trading too much; intelligent use of limit orders and stop losses; identifying currency pair volatility levels; going long carry trade currencies; spotting illiquid pools; the relative merits of candlestick charts versus bar charts; the comparative efficacy of using simple moving averages versus smoothed moving averages; when to use RSI; when to use MACD; when to use ADX; when to use ATR; when to use Bollinger Bands®; and, why ignoring “Tenkan-sen crossovers” is dangerous to your financial health.
Risks You Accept When You Trade Forex
There are a number of risks involved in trading forex, not all of which are easily seen. Many will talk about the dangers of using high leverage (which is a real danger, so stay below 50:1 when starting out), but few will mention how just one good trade can inflate an ego so badly that the next several trades get totally messed up. Forex is just as much of a trading exercise as it is a psychological exercise in self control; stay in control! Trading economic data release events that cause huge price spikes is a big risk, too. Stay away from such siren calls of wanton destruction. Trading highly volatile currency pairs is another danger; always use an ATR indicator.